Colorado Heat Pump Rebates & Incentives (2026)
Colorado still has a strong heat pump incentive stack in 2026, even after the federal 25C tax credit ended December 31, 2025. Income-qualified households can access HEAR rebates of up to $8,000 for a cold-climate heat pump, Xcel Energy customers can earn up to $2,250 per ton in utility rebates, and the state's contractor-claimed heat pump tax credit remains active at $1,000 for air-source systems. This guide covers all major Colorado heat pump incentives available in 2026, including HEAR, Xcel Energy rebates, the state tax credit, and the upcoming DRCOG Power Ahead program. Here's what's actually available.
Last verified: March 22, 2026
Rates and program availability may change after this date.
Colorado
Open
Colorado offers HEAR rebates up to $8,000 for cold-climate heat pumps (income-qualified), Xcel Energy utility rebates up to $2,250/ton, and a $1,000 state tax credit for air-source systems. Federal 25C/25D credits ended December 31, 2025.
Sources:
The short version
✓ HEAR rebates (up to $8,000 per heat pump)
Income-qualified households at or below 150% of Area Median Income (AMI). Point-of-sale discount through CEO-registered contractors. Total household cap of $14,000.
✓ Xcel Energy rebates (up to $2,250/ton)
For cold-climate heat pumps replacing gas heat. Standard ASHPs qualify at $900/ton. No income limits. Additional Whole Home Efficiency bonus available.
✓ Total potential savings: $7,750 to ~$15,750+
$7,750 (above 150% AMI) to $15,750+ (below 80% AMI) for a 3-ton cold-climate system on Xcel. Full electrification packages can reach ~$20,000 total incentives.
✗ Federal 25C/25D tax credits
Ended December 31, 2025. No 2026 installations qualify. The OBBBA terminated both credits seven years early.
⚠ DRCOG Power Ahead Colorado launching April 2026
$1,500 rebate per cold-climate heat pump for Denver metro residents. No income limits. Stacks with Xcel and state credit but does not stack with HEAR (both federally funded). Plans to issue 40,000+ rebates through 2029.
Federal tax credits are gone, but IRA rebates survived
The One Big Beautiful Bill Act (signed July 4, 2025) terminated both the Section 25C Energy Efficient Home Improvement Credit and the Section 25D Residential Clean Energy Credit effective December 31, 2025 — seven years early. If you installed a qualifying heat pump by December 31, 2025, you can still claim on your 2025 return (up to $2,000 for 25C air-source; 30% uncapped for 25D geothermal). No new installations in 2026 qualify. Full details on the federal credit expiration.
The IRA's Home Electrification and Appliance Rebates (HEAR) program was not affected by the OBBBA. The federal tax credits ended because they were tax-code provisions, while HEAR was separately appropriated rebate funding administered through states. Colorado's HEAR allocation remains intact. The Home Efficiency Rebates (HER/HOMES) program also survived and is launching in phases.
Colorado's HEAR program: up to $14,000 per household
Colorado's Home Electrification and Appliance Rebates (HEAR) program launched November 13, 2025 for single-family homes and is administered by the Colorado Energy Office (CEO) with Guidehouse as the implementation partner. It offers point-of-sale rebates — the contractor subtracts the rebate from your invoice at installation.
Eligibility requires household income at or below 150% of county Area Median Income (AMI). Within that threshold, two tiers exist:
| Income tier | Coverage | Max heat pump rebate |
|---|---|---|
| Below 80% AMI | 100% of project costs, up to per-measure caps | $8,000 (cold-climate) / $3,000 (standard) |
| 80%–150% AMI | 50% of project costs, up to per-measure caps | $8,000 (cold-climate) / $3,000 (standard) |
Additional HEAR rebate maximums: $1,750 for heat pump water heaters, $4,000 for electrical panel upgrades, $2,500 for wiring, $1,600 for insulation/air sealing, and $840 for electric cooking equipment. The total household cap is $14,000 across all measures.
⚠ Common mistake: assuming HEAR is available at all income levels
HEAR is only for households at or below 150% AMI. If your household income exceeds that threshold, HEAR does not apply to you. Your primary incentives are Xcel Energy rebates, the state tax credit, and (starting April 2026) the DRCOG Power Ahead rebate. Don't delay a project waiting for HEAR if you don't qualify.
The program is currently available for single-family homes and townhomes. Condos, apartments, and manufactured homes are expected to become eligible in late March 2026. The program runs through 2029 or until funds are exhausted. Of the $45 million reserved for HEAR, over $8 million has already been committed.
HOMES (Home Efficiency Rebates) — separate program
HOMES targets whole-home efficiency improvements and launched in Colorado for manufactured/mobile homes (January 2026) and large multifamily buildings (February 2026). It does not currently apply to site-built single-family homes. HEAR and HOMES cannot be combined on the same project, but a household can use both programs for different measures.
Colorado state heat pump tax credit
Colorado's own state heat pump tax credit (HB23-1272) remains active and is entirely independent of the expired federal credits. The credit launched at $1,500 per system in 2024, dropped to $1,250 in 2025, and settled at $1,000 for 2026 per a built-in phase-down schedule tied to state revenue. No income limits apply.
| Equipment type | 2026 credit amount |
|---|---|
| Air-source heat pump | $1,000 |
| Ground-source, water-source, or combined-source | $2,000 |
| Heat pump water heater | $250 |
The contractor claims the credit from the state and must pass at least 33.33% to the customer as a discount on the invoice or a separate payment. Many contractors pass through more than the minimum — ask before signing. All heat pumps must be ENERGY STAR certified and AHRI-matched.
Xcel Energy heat pump rebates
Xcel Energy is Colorado's largest electric utility and offers the state's most substantial utility-level heat pump rebates. Xcel issued 10,640 heat pump rebates worth $57 million in 2025 and maintained elevated rebate levels into 2026.
| System type | Rebate | Key requirement |
|---|---|---|
| Cold-climate ASHP (gas replacement or integrated controls) | $2,250/ton | Must replace gas heating or include integrated backup heating controls |
| Standard ASHP | $900/ton | ENERGY STAR certified |
| Ground-source heat pump | $1,000/ton | ENERGY STAR certified |
| Heat pump water heater | $2,250 | ENERGY STAR certified, replaces electric resistance |
Xcel also offers a Whole Home Efficiency bonus (25% extra on the standard rebate when completing 3+ measures) and a $600 insulation/air sealing bonus that can further reduce project costs. For mini-splits, contractor requirements may differ from ducted and ground-source programs — confirm eligibility rules with Xcel before signing a proposal.
Mountain Energy Project
Select high-altitude communities (Breckenridge, Leadville, Silverthorne, and others) have access to dramatically enhanced rebates through Xcel's Mountain Energy Project — up to $7,500/ton for mini-splits and $20,000/ton for ground-source systems. If you live above 7,000 feet, ask your contractor about Mountain Energy Project eligibility.
Other Colorado utilities
Colorado's utility landscape extends well beyond Xcel. If you're not an Xcel customer, check your utility's current offerings:
Colorado Springs Utilities
Up to $2,000 for qualifying cold-climate ASHPs, $750 for standard ASHPs, and $400 for heat pump water heaters. Additional bonuses for income-qualified customers.
Holy Cross Energy
Offers both standard and income-qualified tiers with weatherization bonuses. Serves the Vail Valley, Aspen, and surrounding mountain communities.
Efficiency Works (Fort Collins / Platte River Power Authority)
Heat pump rebates for Fort Collins, Loveland, Longmont, and Estes Park customers through the Efficiency Works program.
United Power
Serves the northern Denver metro area. Offers rebates up to $2,500 for qualifying heat pump installations.
DRCOG Power Ahead Colorado (Denver metro)
DRCOG's Power Ahead Colorado is a $273 million program ($199.7 million EPA Climate Pollution Reduction Grant plus $73.3 million in local government match) launching in April 2026. The program includes $40 million earmarked for heat pump and water heater rebates across the Denver metro area's 58 DRCOG member governments.
The rebate is $1,500 per Energy Star cold-climate certified heat pump — ducted or ductless. No income limits. The program plans to issue 40,000+ rebates through 2029.
⚠ Power Ahead does not stack with HEAR
Both Power Ahead and HEAR are federally funded. Federal rules prevent stacking two federally funded programs on the same project. Power Ahead does stack with Xcel Energy rebates and the Colorado state tax credit. For income-qualified households, HEAR typically provides more total savings than Power Ahead.
The program also includes no-cost home upgrades for low-income and disadvantaged communities, energy advising services, and workforce training for nearly 5,000 heat pump installers. Check poweraheadcolorado.org for launch details.
How incentives stack in Colorado
Colorado residents can stack HEAR rebates + utility rebates + the state tax credit on a single heat pump installation. The Colorado Energy Office explicitly permits this. Key restrictions: HEAR cannot be combined with other federal grants (including HOMES and Power Ahead) on the same measure, HEAR is only available at or below 150% AMI, and total incentives cannot exceed project cost.
Above 150% AMI — 3-ton cold-climate ASHP (Xcel customer, gas replacement)
- Xcel Energy rebate ($2,250 × 3 tons): $6,750
- Colorado state heat pump tax credit: $1,000
- Power Ahead (April 2026, Denver metro only): $1,500
Realistic maximum: ~$9,250 (Denver metro) or ~$7,750 (outside Denver)
80%–150% AMI — 3-ton cold-climate ASHP (Xcel customer, gas replacement)
- HEAR rebate (50% coverage, up to cap): $8,000
- Xcel Energy rebate ($2,250 × 3 tons): $6,750
- Colorado state heat pump tax credit: $1,000
Realistic maximum: ~$15,750
Below 80% AMI — 3-ton cold-climate ASHP (Xcel customer, gas replacement)
- HEAR rebate (100% coverage, up to cap): $8,000
- Xcel Energy rebate ($2,250 × 3 tons): $6,750
- Colorado state heat pump tax credit: $1,000
Realistic maximum: ~$15,750 (may cover full project cost)
What you'll actually pay
A typical 3-ton cold-climate heat pump installation in Colorado costs $13,200–$21,000. After stacking available incentives, expect to pay approximately $5,250–$13,250 out of pocket above 150% AMI, or as little as $0–$5,250 for income-qualified households below 80% AMI where HEAR covers 100% of costs up to the per-measure cap.
Scenarios assume Xcel gas-to-electric replacement tier. Non-Xcel utility customers will have different rebate amounts. Power Ahead and HEAR cannot be combined on the same project. Xcel Whole Home Efficiency bonus and Mountain Energy Project could increase savings further in qualifying situations.
Income-qualified programs beyond HEAR
Weatherization Assistance Program (WAP)
Free home energy upgrades — including heat pumps on a limited basis — for households earning below 60% of State Median Income. Colorado was the first state to integrate HEAR funding into WAP (October 2024). Automatic qualification for recipients of SNAP, LEAP, TANF, SSI, or Medicaid. Apply at energyoffice.colorado.gov or call 1-866-HEAT-HELP.
Energy Outreach Colorado (CARE program)
Free energy efficiency upgrades including insulation, air sealing, and appliance replacement for income-qualified residents.
LEAP (Low-income Energy Assistance)
Heating cost assistance November through April. While not a heat pump program, LEAP recipients automatically qualify for WAP and CARE services.
✓ Best candidates for Colorado heat pump incentives
Xcel Energy customers replacing gas heat (highest utility rebates), households below 150% AMI (HEAR eligible), homeowners in Mountain Energy Project communities (dramatically enhanced Xcel rebates), Denver metro residents (Power Ahead stacks starting April 2026), and anyone planning multiple upgrades (Whole Home Efficiency bonus).
Cold-climate specs and Colorado installation considerations
Colorado spans ASHRAE climate zones 4B through 7, with most Front Range communities in zone 5B (cool-dry) and mountain areas in 6B or 7 (cold to very cold). Cold-climate heat pumps are strongly recommended statewide and financially incentivized — Xcel's cold-climate rebate ($2,250/ton) is 2.5 times the standard ASHP rebate ($900/ton).
| City | ASHRAE zone | Winter design temp | Elevation |
|---|---|---|---|
| Denver | 5B | 1°F | 5,280 ft |
| Colorado Springs | 5B | 2°F | 6,035 ft |
| Fort Collins | 5B | −2°F | 5,003 ft |
| Breckenridge | 7 | −11°F | 9,600 ft |
| Grand Junction | 4B | 8°F | 4,593 ft |
The ENERGY STAR Cold Climate designation requires a COP ≥1.75 at 5°F and heating capacity at 5°F of at least 70% of rated capacity at 47°F. Modern cold-climate models from Mitsubishi, Carrier, Bosch, and Daikin can provide reliable heating down to −13°F to −20°F.
Altitude matters in Colorado. Homes at higher elevations face reduced air density, which affects heat pump performance. Proper sizing through Manual J calculations that account for altitude is essential. Xcel's Mountain Energy Project addresses this with enhanced rebates in select high-altitude communities.
Dual-fuel systems (heat pump plus existing gas furnace backup) are widely recommended for mountain homes and are eligible for both Xcel and HEAR rebates. If you're also considering home battery storage, see our battery guide.
Colorado has no state-level HVAC license — mechanical contractor licensing occurs at the city/county level, with requirements varying between jurisdictions. Building permits are generally required for heat pump installations, typically both mechanical and electrical.
How to get started
Check your income eligibility for HEAR
Use the Colorado Energy Office portal or call 866-336-0016. HEAR is only available at or below 150% AMI. Income verification takes 2–4 weeks, so start early.
Get quotes from CEO-registered contractors
A registered contractor will guide you through HEAR qualification and handle the point-of-sale discount. Get 2–3 quotes. You must use a registered contractor to receive HEAR rebates.
Verify Xcel rebate tier with your contractor
Confirm whether your installation qualifies for the $2,250/ton cold-climate rate or the $900/ton standard rate. If you're not an Xcel customer, check your utility directly.
Confirm the state tax credit pass-through
Ask your contractor how they'll handle the $1,000 state credit pass-through (invoice discount vs. separate payment). Many contractors pass through more than the required 33.33% minimum.
Schedule installation
Your contractor handles permit applications. Ensure equipment is ENERGY STAR certified, properly sized for your home and altitude, and meets cold-climate specifications if targeting the higher Xcel rebate tier.
What to watch in 2026
IRA funding runway
Colorado's HEAR program runs through 2029 or until funds are exhausted. Demand has been strong — over $8 million of the $45 million HEAR allocation has already been committed. There is no guarantee funding will last through 2029. Act while funding is available.
DRCOG Power Ahead launch (April 2026)
$1,500 per cold-climate heat pump for Denver metro residents. No income limits. Does not stack with HEAR but stacks with Xcel and state credit. This adds a new option for above-150% AMI households in the Denver area.
HEAR housing type expansion
Condos, apartments, and manufactured homes are expected to become eligible in late March 2026. Check the CEO website for updates.
Frequently asked questions
What heat pump rebates are available in Colorado in 2026?
Colorado has three main incentive layers in 2026: the HEAR program (up to $8,000 for income-qualified households below 150% AMI), Xcel Energy utility rebates (up to $2,250 per ton for cold-climate systems replacing gas heat), and the Colorado state heat pump tax credit ($1,000 for air-source). The federal 25C tax credit ended December 31, 2025 and does not apply to 2026 installations. DRCOG’s Power Ahead Colorado is also launching in April 2026 with a $1,500 rebate for Denver metro residents.
Can I stack HEAR with Xcel Energy rebates and the Colorado state tax credit?
Yes. The Colorado Energy Office explicitly permits stacking HEAR rebates with utility rebates and the state heat pump tax credit. The main restriction is that HEAR cannot be combined with other federal grants or the HER/HOMES program on the same measure, and total incentives cannot exceed the project cost. HEAR also cannot stack with the DRCOG Power Ahead rebate because both are federally funded.
What is the Xcel Energy heat pump rebate in Colorado?
Xcel Energy offers up to $2,250 per ton for cold-climate air-source heat pumps that replace gas heating or include integrated backup heating controls. Standard air-source heat pumps qualify for $900 per ton. Ground-source systems receive $1,000 per ton. Heat pump water heaters receive $2,250. Xcel also offers a Whole Home Efficiency bonus (25% extra when completing 3+ measures) and a $600 insulation/air sealing bonus.
Is the Colorado state heat pump tax credit still available?
Yes. Colorado’s state heat pump tax credit (HB23-1272) is independent of the expired federal credits. For 2026, it provides $1,000 for air-source heat pumps, $2,000 for ground-source or water-source systems, and $250 for heat pump water heaters. The credit amount phased down from $1,500 in 2024 per a built-in schedule tied to state revenue. The credit is claimed by the contractor and at least 33.33% must be passed through to the customer.
Who administers Colorado’s heat pump rebate programs?
The Colorado Energy Office (CEO) administers the HEAR program with Guidehouse as the implementation partner. The state heat pump tax credit is administered through the CEO and the Colorado Department of Revenue. Xcel Energy runs its own utility rebate program. DRCOG manages the Power Ahead Colorado program for the Denver metro area. Each program has its own registration and application process.
Do I need a cold-climate heat pump in Colorado?
Cold-climate heat pumps are strongly recommended for most of Colorado. The state spans ASHRAE climate zones 4B through 7, with most Front Range communities in zone 5B. Cold-climate models are also financially incentivized — Xcel’s cold-climate rebate ($2,250/ton) is 2.5 times the standard rate ($900/ton). Altitude also affects performance, so proper sizing through Manual J calculations is essential.
Sources
- Colorado HEAR program — Colorado Energy Office
- Colorado HEAR FAQ — Colorado Energy Office
- Colorado state heat pump tax credit — Colorado Energy Office
- Xcel Energy heat pumps — residential
- Colorado Springs Utilities — rebates and incentives
- Holy Cross Energy — residential rebates 2026
- Weatherization Assistance Program — Colorado Energy Office
- Colorado Sun — heat pump installations doubled in 2025
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to Colorado homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Colorado has additional local and co-op programs that may apply in your area. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with the Colorado Energy Office, your utility, and your contractor before making decisions.